There is a wonderful graphic on the New York Times site showing how Facebook's privacy statement has got larger and larger to cover the growing holes in its privacy policy. The mapping isn't perfect: if it were, the declaration of Facebook's dedication to privacy would have to be of almost infinite size, since the default amount of privacy Facebook now offers is practically zero. When the site first started, very few people could join, and nothing became public, even to them, without the users' express permission. Now everyone can join and everything is public to almost all of them unless you make a determined effort to hide it. This effort has to be renewed every six months or so when Facebook revises its privacy policy to make it more opaque and less effective. There is a wonderfully graphic animation of the process at this site.

If you decide it isn't worth it, Facebook turns out to be very difficult to leave. It is very easy to "deactivate" your account, but it's also almost meaningless. Nothing is deleted by deactivation. If you return a year later, your account is still there, with the same password, the same friends and all the same data.

It is difficult to overestimate how much a Facebook user tells the company about his or her life. I've just had a friend (in real life) look me and my children up on the system. She's not a friend of either on Facebook, and both are reasonably cautious about privacy. Nonetheless, it was immediately obvious what their interests were, and each had most of their social networks listed. Ten years ago, when the British government proposed to make traffic data available to a wide variety of agencies under the Regulation of Investigative Powers Act, there was an outcry from civil libertarians. Their point was that you hardly need to know what people are saying to each other if you know who they are talking to. And now Facebook knows and makes this information freely available to almost anyone.

This may seem like a bad way to treat customers, but the whole point about Facebook is that users aren't customers. Anyone who supposes that Facebook's users are its customer has got the business model precisely backwards. Users pay nothing, because we aren't customers, but product. The customers are the advertisers to whom Facebook sells the information users hand over, knowingly or not.

Google, which collects less information about its users, is far more scrupulous about the uses to which it is put. Google also makes it much easier to remove your traces from the system. There is no equivalent on Facebook to Google's dashboard page, which shows you all the information you have made public across Google's sites; nor is it as easy to get back from Facebook information you have once put in. This isn't to diminish the extraordinary record of how we think that Google collects by simply tracking our queries, but Facebook collects more. That's what it's designed to do. The games and apps available there are an important part of this process. Almost all of these are simply devices to harvest information about players and use what they have found to sell themselves to everyone else on their contact list.

How can all or any of this be stopped? Facebook won't change. Its entire business model depends on selling privacy to advertisers. If public revulsion forces a halt, or a retreat it will start again in six months' time. This shouldn't really be surprising.

What is to be done? The kind of computing infrastructure needed to run a global service like Facebook isn't cheap, and somebody has to pay for it. Perhaps a service more ethical about privacy than Facebook is being hatched in a garage somewhere right now. It's certainly possible, as the example of Google shows.

But the fundamental problem remains. Ever since money was invented, the people who have made money out of aimless chat have been the landlords, whether they were selling beer, coffee or a space on the web. You may think that your Facebook friends care what you're up to, but they'd drop you like a stone if it cost them money to learn you had just become imaginary mayor of an imaginary town, or even that you had just had a row with your mother and slammed the phone down. The only people to whom that information is worth even a fraction of a penny are those who want to take advantage of it to sell you something you don't need – except, that is for your real friends, but imaginary ones are so much more reassuring.

George Monbiot: The tobacco industry does it, the US Air Force clearly wants to ... astroturfing – the use of sophisticated software to drown out real people on web forums – is on the rise. How do we stop it?